For inferior goods
A. the substitution and income effects of a price increase will both decrease the quantity of the good demanded.
B. the substitution effect of a price increase will decrease the quantity of the good demanded while the income effect of a price increase will increase the quantity of the good demanded.
C. the substitution and income effects of a price increase will both increase the quantity of the good demanded.
D. the substitution effect of a price increase will increase the quantity of the good demanded while the income effect of a price increase will decrease the quantity of the good demanded.
Answer: B
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When society gets the most it can from its scarce resources, then the outcome is called
a. equitable. b. efficient. c. normal. d. efficacious.
An in-kind gift causes the budget line to:
A. rotate counterclockwise. B. shift to the left in a parallel fashion. C. shift to the right in a parallel fashion. D. None of the statements is correct.
Many countries impose tariffs or quotas to protect the domestic industry from competition.
Answer the following statement true (T) or false (F)
In considering economic profit in a market economy, it is correct to say that
A. economic profit tends to reduce the production efficiency of the economy, leading to wasted resources. B. economic profit performs an important function in allocating resources to their most highly valued uses. C. economic profit will only occur, even in the short run, as a result of imperfect competition. D. there should never be any economic profit.